Toss a pebble into a pond and watch the ripples. In the case of the iPhone, it's more like a grenade was tossed into the pond full of typical telecom industry punditry. All species of industry assumptions are now floating on their sides, stunned, on the surface of the pond. Let's fillet some and see what's inside:
Don't say it's the new iPod
The principal mistake made in analyzing the iPhone is the being phone-centric. In fact, the iPhone is the new iPod. It is the video iPod. It is the new iPod user interface. It is the WiFi iPod. It is the first of many new iPods, some of which won't be mobile phones. If you had been thinking “How many people really want a $600 phone from Apple?” think again: Apple didn't sell 500,000 to perhaps 700,000 phones in the first weekend. They sold that many high-end iPods, too. This is the factor missing from most projections that will enable Apple to safely make their numbers for the iPhone.
Telecom industry people will have to learn to look at the iPhone as an iPod first. They don't look at the Nokia N95 as a video camera. Nor do they look at a Blackberry as a PDA. This is something entirely new, and it will affect the way future iPhones are formulated.
3G has value
Some regret has been expressed over iPhone not having 3G. The real reason for the tut-tutting about no 3G in the iPhone is that the telecom industry was hoping iPhone would be 3G's killer app. The reality is the mobile data network is a backstop to WiFi until speeds are up and pricing is down. It is possible the gap will never be closed. 3G has limited value and significant down-side in higher hardware cost and lower battery life.
Some iPhone customers, mostly pundits that don't see their phone bill, have griped about lack of 3G. But more than balancing that out has been buzz about how to use an iPhone with a cheap prepaid account, or no mobile account at all.
Where is 3G in Apple's priority list? It's below taking the iPhone down-market, so raising costs by adding 3G, except at the top of the model range, is not likely to be part of the plan.
Carrier-driven product management works
iPhone was defined within Apple, with the goal in mind of transferring Apple's success in media players to the mobile phone market. It wasn't designed for the existing network. It wasn't designed for a carrier's ARPU strategy. It wasn't designed to provide a delivery vehicle for a new section of the walled garden. iPhone was subject to none of the industry influences that go into “normal” phones. And yet the iPhone is a huge boon to AT&T, with half of iPhone customers switching to AT&T. Will other carriers, especially second tier carriers that don't have the resources to do more than follow the lead of first tier carriers' mobile commerce and data strategies, add more products that are not defined by their internal product management initiatives? Probably not! But they should consider that the more they tighten their grip, the more churned customers slip through their fingers.
It competes against smartphones
Name a smartphone product that could sell 700,000 units at launch. How many of Apple's 700,000 first-weekend customers compared iPhone against a smartphone? Still, many futile efforts will now be launched to turn smartphones into iKlones. Now you know how to spot the next set of industry train wrecks. Ironically, Nokia, which has the best chance of actually making a competitor to iPhone is probably trapped by the fact the S60 UI is the best among smartphone UIs, when abandoning the smartphone UI is the only way to really compete with iPhone.
The rumors of a Microsoft “Zune Phone” would be credible and welcomed, if only Zune hadn't flopped badly enough to damage anything called a Zune Phone. A Zune Phone would break from the smartphone mold and it would actually be a good idea to make one. Or, for that matter, to put MSN Messenger into a Zune, with a Zune-ish UI. Anyone willing to put away the PDA heritage in the museum where it belongs has a good chance of success.
All bow before mobile unit volume
One reason why mobile telephony is so fascinating is the amazing volume of phones being sold. A billion per year and growing, and not all developed-world markets are saturated. This makes phones, and the components that go into phones – the systems-on-a-chip, or SoCs – the most important computing devices today.
Because of the volume of mobile phones being sold, it was assumed that when mobile phones started to incorporate music players it would spell the end of standalone music players. What follows from this prediction is that iPhone is a defensive product – a shift to the winning mobile platform and away from a standalone iPod.
But, while everyone else still must bow before mobile unit volume, Apple now sells enough iPods that mobile unit volume cannot overwhelm the iPod. Apple isn't making an iPhone as a defensive measure. In fact, Apple has flipped this around to where Apple is selling phones because they are part of a new-generation iPod.
The game will really be on when iChat is added to the mix. Then Apple will be adding new modes of communication and new communications applications to their phone products.